Six Sigma Quality Methodology at GE
Foreign Investors Council of Kazakhstan Operations Working Group
October 27th, 2005
Agenda
> Introduction > Change Process > Six Sigma • Concept • DMAIC • Evolution • At Customer For Customer (ACFC) > Project Commitments
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General Electric
multi business company, working in the spheres of leading edge technology, production, information and financial services.
Global company
2004 revenues - $152 Bln., including $72 Bln. Outside of US 300 000+ employees in the world
Presence in more than 100 countries
Production facilities in 32 countries
The Most respected company in the World
Financial Times
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Six business groups to provide best solutions for our customers
Infrastructure Commercial Finance Industrial
Healthcare Consumer Finance
NBC Universal
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GE Infrastructure
World Leading supplier of best solutions for infrastructure sectors of economy, including aircraft energy, power generation, oil and gas, railways, water and others. GE Infrastructure also offers financial services in energy and aviation sectors.
DIVISIONS • Oil & Gas • Energy • Rail • Aircraft Engines • Water • Energy Financial Services • Aviation Financial Services
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GEnx Aircraft engines power new, most sophisticated aircrafts, which can fly longer with lower fuel consumption
GE Energy
One of the World leading supplier of technology solutions for Energy sector. We have everything to satisfy our customers providing reliable and efficient sources of energy.
Products 39%
Services 36%
Aero 8%
Wind 8%
Nuclear 6%
Hydro 3%
$16+Bln. of sales
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GE Oil & Gas
World leader in production of the best equipment and providing services for oil and gas sector. Having our engineering centers in the US and Europe we offer solutions for hydrocarbon exploring, processing, transporting and storing. We also offer products and services, including analysis and diagnosis for petrochemical plants and pipeline systems.
Equipment
•Rotary, axial and piston compressors •Gas and steam turbines •Centrifugal and multi-stage pumps •Control systems •Turbodetanders
Services
•Maintenance and repair •Sparepart supply •Pipeline solutions •Training for management and workers
$3 Bln. of sales
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GE Rail
Worldwide leader and supplier of technology solutions for railways, shipbuilding, offroad machines and drilling equipment.
Products and Services
Locomotive production and maintenance and modernization services Control and automation equipment and solutions Production of drives and electric motors for off-road machines and drilling equipment Marine power plants
$3 Bln. of sales
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Stages of GE's Culture Change
high Six Sigma Quality
The Way We Work, Customer Centric
Making Customers Winners:
GE Tool-Kit
Key Strategic Initiatives:
QMI*, NPI*, OTR*, SP*, Productivity, Globalization
Intensity of Change
* New Product Introduction Quick Market Intelligence Order to Remittance Supplier Partnership
Change Acceleration Process:
increase success and accelerate change
Process Improvement:
Bullet train approach, continuous improvement, re-engineering
Productivity / Best Practices:
Best practice sharing, looking outside GE
low Work-Out / Town Meetings:
empowerment, bureaucracy busting, action
Time
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Selecting a Change Process
Scope of Change Component of Change
Small
Large
Q
Technical Strategy
Work-Out™
Expert-driven
Six Sigma
Data-driven
A
Cultural Strategy
•Leadership Development •GE Values & 360° Reviews
CAP
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Process Improvements
Versions of a Process
What You Think It Is …
What It Actually Is …
What You Would Like It To Be …
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Implementing Change
QXA=E
The Challenge: Do it with Speed
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Helping Change Happen Helping Change Happen
Successful Change
(Lessons from CAP)
QxA=E
“Q” (Quality) is the Technical Strategy “A” (Acceptance) is the People Strategy “E” (Effectiveness) is Sustained Change
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Change Acceleration Process: A Model For Change
Leading Change
Creating A Shared Need Shaping A Vision Mobilizing Commitment
Current State Transition State Improved State
Making Change Last Monitoring Progress
Changing Systems & Structures
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What Is Six Sigma?
A philosophy about quality A measurement of quality A goal for quality improvement A statistical quality methodology An enterprise-wide quality culture
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What is Six Sigma?
Sigma is a measure of Standard Deviation
> It is the amount of variation in a process
Process to reduce defects per million opportunities
> From current levels to “Six Sigma” > “Sigma” is standard deviation from the ideal > Can be applied to all business functions
– Management and Manufacturing – Transactions – Products – Service – Sales Support Quantitative methodology
> Use measurements and scientific process
s
2 3 4 5 6
DPMO
308,537 66,807 6,210 233 3.4
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Six Sigma Concept
Every Human Activity Has Variability...
Customer Specification
X XXX XXXX 1s XXXXXX XXXXXXXX XXXXXXXXXX XX XXXXXXXXXXXXXX
Mean
defects
Reducing Variability Is the Essence of Six Sigma
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Is 99% Good?
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Six Sigma Performance
99% Good (3.8 Sigma) •20,000 lost articles of mail per hour •Unsafe drinking water for almost 15 minutes each day 99.99966% Good (6 Sigma) •Seven articles lost per hour •One unsafe minute every seven months
•5,000 incorrect surgical operations per week
•Two short or long landings at most major airports each day •200,000 wrong drug prescriptions each year
•1.7 incorrect operations per week
•One short or long landing every five years •68 wrong prescriptions per year
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Why Six Sigma?
Strategy for Running a Business or Organization Tool to Eliminate Variation
Vision of Product & Service Excellence
Value to Our Customers Metric of World Class Companies Goal for Competitive Strength
6 Sigma…. The Way We Run Our Business
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The Key Methodologies
D M A I C
DEFINE
OPPORTUNITY
MEASURE
SYMPTOMS
ANALYZE
CAUSES
IMPROVE
SOLUTIONS
CONTROL
SUSTAIN
CHARTER
PERFORMANCE
DRIVERS
ACTIONS
CONTROLS
D M A D V
PROGRAM DESCRIPTION
NEEDS & REQUIREMENTS
HIGH LEVEL DESIGN
DETAILED DESIGN
ROLL-OUT & CONTROL
DEFINE
MEASURE
ANALYZE
DESIGN
VERIFY
Powerful, Simple Methodologies
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12 Step DMAIC Strategy
Formulating the Practical Problem
DMAIC
DMAIC
Step 0 : Build the House of Quality A: Identify Project CTQs B: Develop Team Charter C: Define Process Map Step 1 : Select the CTQ characteristic Step 2 : Define Performance Standards Step 3 : Validate the Measurement System
“How do my customers look at me?” “What do I want to Improve?” “What’s the best way to measure?” “Can I trust the output data?”
Changing to a Statistical Problem
DMAIC
Step 4 : Establish Process Capability
Step 5 : Define Performance Objectives Step 6 : Identify Variation Sources “How good am I today?” “How good do I need to be?” “What factors make a difference?”
Developing a Statistical Solution
DMAIC
Step 7 : Screen Potential Causes Step 8 : Discover Variable Relationships Step 9 : Establishing Operating Tolerances “What’s at the Root of the Problem?” predict the Output?” “How can I
“How tight does the control have to be?”
“Can I trust the in-process data?” “Have I reached my goal?” “How can I sustain the improvement?”
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Implementing the Practical Solution
DMAIC
Step 10 : Validate X Measurement Systems Step 11 : Determine Process Capability Step 12 : Implement Process Control
DMAIC
Define
Define the
Critical to Quality Requirements (CTQ’s)?
Problem Statement
> > > > > What’s the problem? When or under what conditions does it occur? Where does it occur? What is the extent of the problem? What is the impact of the problem? ... define the problem, clearly and related to customer...
Goal Statement
> What will success look like?
Project Team High Level Process Map
> SIPOC Map
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DMAIC
Measure
Process X’s or Factors
X1 X2 X3 X4 What is the specific CTQ characteristic you will improve How will you measure the process performance? What data do you need – what is the data collection plan? Is the data valid and accurate?
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...measure what you care about; know your measure is good...
Outputs
PROCESS
Y1 Y2 Y3
DMAIC
Analyze
… establish process capability…look for root causes; generate a prioritized list of Xs...
Y = F(X1, X2, X3…Xn)
What are the most likely causes?
> The “Vital Few” vs. the “Trivial Many”
How do you know?
> Graphical Tools > Statistical Tools
Cause
Fishbone
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Effect
Pareto
DMAIC
Improve
> > > >
... determine the optimal solution ...
How can we fix the process?
Generate alternatives Assess the risks Test the alternatives Select the best alternative
Can we confirm the problem by turning it “off” and “on”?
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DMAIC
Control
…be sure the problem doesn’t come back...
Establish new process capability How can we sustain the solution so that the problem stays fixed, permanently?
> Mistake Proofing > Robust Design > Process Monitoring
Before
Low er Spec Upper Spec Low er Spec
After
Upper Spec
6.5 5.5 4.5 3.5 2.5 Observ. 2 1 0
Report 2: Process Capability for V
I and MR Chart
3.0SL=6.233 X=4.458 -3.0SL=2.683 10 20 30 40 50 3.0SL=2.180
R=0.6673 0 -3.0SL=0.000
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80
90
100
110
120
130
80
85
90
95
100
105
110
115
120
Potential (ST) Capability
Process Tolerance
2.74494
I I I
Actual (LT) Capability
Process Tolerance
2.86349
I I I
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6.17106
6.05251
The People
GM Global Quality & Six Sigma
Master Black Belts
Develop tools, and teaching materials. Conduct all training and communication sessions. Mentor Black Belts and their projects.
Quality Leaders
Greenbelts
Help choose projects, interview Black Belt candidates, tie project DPU to business needs. Remove barriers and drive Six Sigma into the culture of their functions. Apply Six Sigma tools and methodology in everyday work.
Six Sigma Black Belts
Full-time project work, change agents, expert application of tools
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Six Sigma Evolution
2001... 2000 1998 - 99
At the Customer for the Customer Customer Centricity
Six Sigma with the Customer DFR - Design for Reliability
Design for Six Sigma Commercial Process Application
1996 - 97
All Employees Trained at Green Belt Level (3 Weeks of Training)
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Six Sigma Benefits
6 Sigma Cost 6 Sigma Productivity Customer Benefits $2.5B
$3.0B
$3.5B
$500
$3.4B
$900
$1.2B $700 $450 $500 $600 $600
$2.5B
$200 $170
$380
Cost Benefit Cost Benefit Cost Benefit Cost Benefit Cost Benefit 1996 1997 1998 1999 2000
Cost Benefit 2001
$3.4 Billion in 2001 … Customers & Shareholders Love It!
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What is ACFC?
ACFC Is About •Continuously Providing Value •Solutions •and Tools Which Impact the Key Competitive Advantages of Our Customers, Directly Increasing Their Profitability and
Leads to Mutual Growth.
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ACFC Goals
• Understand Your Entire Business’ Needs • Share Ideas – Learn from Each Other • Develop Solutions That Work Best for You
• Create Value For You
• Help You Drive Growth
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ACFC Process
Customer Discovery Session
• Principle &
Goals
Customer Kick-off Meeting
• Conduct
Meeting with MultiFunctional Team for Needs Assessment
GE Solutions Offering
• Develop
Offering
Deliver Customer Solution
• Customer Six
Sigma Projects
Verify Impact with Customer
• Customer Impact
• Review Progress • Report-Out and Next Steps
• Common Understanding
• Organize Teams & Projects • Define Project Goals
• GE Tools and Best Practices • Customer Training • GE Business Solutions • Selling To / Through GE
• Customer Buyin
• ACFC Playbook Examples • Brainstorming • Needs Prioritization
• Agreement on Customer Sponsor
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ACFC Offerings
Operations
Outage Cycle Time Reduction Performance Optimization Fleet Dashboard On-line Washing Optimization Raw Materials Waste Reduction Reduction of Trips
Logistics
Vendor Rating Part’s Inventory Optimization Platform Logistics Delivery Speed Order Entry and Customer Service Faster Tendering Process Inventory Management
Human Resources
Facilitator Training Change Acceleration E360 Session C Travel Expenses Reduction Shift Schedules and Work Patterns Compensation and Benefits Six Sigma Deployment
Finance
Financial Measurements Information Systems Inventory Management Lease and Investment Financing Trade Payable Services Investors Relations ROI Improvement Corporate Audit Staff
Environmental Health & Safety
CO2 Trading Waste Water Reduction Environmental, Health and Safety Dashboard Low Nox Emission Waste Management Reduction
Gas Turbine Reliability Improvement
Asset Management
Additional Tools
• • • • •
Needs Assessment Process Mapping Root Cause Analysis Lean Productivity Kaizen
• Six Sigma • Change Acceleration Process (CAP) • Digitization • Benchmarking • New Product Introduction (NPI)
• • • • •
Facilitation WorkOut Quick Market Intelligence (QMI) e-Business R- Process
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Our Commitment to You
• Understand Your Business Needs • Offer Experienced GE Technical People/Expertise/ Industry Knowledge
• Establish Baseline for Current Process
• Develop Process Improvements • Schedule Regular Progress Reviews • Agree on Measurements for ACFC Program • Conduct Report-out of Results
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Your Commitment to the Program
• Select Champion within Your Organization • Dedicate Needed Resources
• Provide Data to Establish Baseline for Existing Process
• Participate in Regularly Scheduled Progress Reviews • Agree on Measurements for ACFC Program • Validate Program Results • Create Opportunities for Mutual Growth
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Contact information:
Astana:
Konstantin Nazarov – Market development manager Ph: (3172) 591 407 Fax: (3172) 591 413 E-mail: konstantin.nazarov@ge.com
Moscow:
Istvan Szabo – Six Sigma ACFC Black Belt Ph: (7 095) 739 6916 Fax: (7 095) 739 6901 E-mail: istvan.szabo@med.ge.com